Chapter 1 - 147.1(1), 248(1), 8300(1), 8500 – Definitions

 

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1 147.1(1), 248(1), 8300(1), 8500 – Definitions

Any reference in this manual to the Act is in reference to the Income Tax Act and any reference to the Regulations is in reference to the Income Tax Regulations. Appendix B is a list of all the acronyms used in this manual.

1.1 Actuary – 147.1(1)

(Actuaire)

This is mainly relevant for employer contributions to a DB plan under subsection 147.2(2) of the Act. If the plan terms define who will be the actuary, only a Fellow of the Canadian Institute of Actuaries (FCIA) is acceptable. Reference to a firm, a member of whom is a FCIA, is acceptable.

Paragraph 17(d) of IC72-13R8, Employees’ Pension Plan, allows submissions from other actuaries for a foreign plan. This no longer applies as foreign plans are not acceptable for registration under the Act.

1.2 Active Member – 8500(1), 8500(7)

(Participant actif)

An active member of a pension plan in a calendar year is:

1.3 Additional Voluntary Contribution – 248(1)

(Cotisation facultative)

The two conditions that make a contribution by a member an additional voluntary contribution (AVC) are:

Where a pension plan has both an MP provision and a DB provision and member participation in the MP provision is voluntary, any member contributions whether required or not under the MP provision would qualify as an AVC.

Where a pension plan has only MP provisions and member participation in one of the MP provisions is voluntary, any member contributions whether required or not under that MP provision would qualify as an AVC. The plan terms must clearly state that member participation in a particular MP provision is voluntary and that member participation in the provision is not considered a general condition of plan membership.

Under the PBSA or a similar law of a province, required contributions to an MP provision may not be treated as AVCs. However, we will consider the contributions to be AVCs under the Act if the contributions satisfy the definition of an AVC.

Maximum pension limit for pre-reform benefits
The combined value of benefits under both an MP provision and a DB provision for pre-reform service is subject to the maximum pension benefit limit of paragraph 9(g) of IC72-13R8. AVCs are not included in calculating the maximum pension benefits payable for pre-reform service. Employer required contributions plus the earnings (interest) on those contributions made under an MP provision are included in calculating the maximum pension benefits payable for each member. The inclusion only applies to benefits accrued for pre-reform service.

Contributions made by a member or an employer to an MP provision of a pension plan that also has a DB provision are not included in calculating the maximum LRB that can be paid for a member for post-reform service.

Accepting AVCs in plans with an 18% required contribution rate
We will accept for registration pension plans that provide for an 18% required contribution rate formula under one of the MP provisions and also allows for AVCs to be made under another MP provision. The plans will be assessed individually to determine whether or not AVCs are acceptable despite a required contribution rate of 18%.

For example, where the definition of earnings or compensation under the plan excludes over-time, bonuses, expense allowances, commissions, or other taxable benefits of a member's compensation for purposes of the PA limits, the member’s total compensation may be more than the earnings definition in the plan, leaving considerable room to make AVCs without exceeding the appropriate PA limits. Where a plan defines earnings in a way that excludes some part of a member's compensation and there is no reason to suspect that the plan may become revocable under subsection 147.1(8) of the Act, we will accept the terms allowing for AVCs to be made.

Cross references:

Definition of Compensation – 147.1(1)
Pension Adjustment Limits – 147.1(8)
Conditions for Registration – 8501(1)(e)
Pre-1991 Benefits – 8503(3)(e)
Maximum Benefits and Contributions – Paragraphs 9(g) & 11 of IC72-13R8

1.4 Administrator – 147.1(1)

(Administrateur)

The plan administrator is the person or body of persons who has the ultimate responsibility for administering the plan such as the employer, a board of trustees, a consulting firm, or an insurance company. The plan terms are not required to state who the administrator will be.

Cross references:

Administrator – 147.1(6)
Obligations of the Administrator – 147.1(7)

1.5 Average Consumer Price Index – 8500(1)

(Moyenne de l’indice des prix à la consommation)

The average consumer price index (CPI) for a year is 1/12 of the total of the CPIs for each month in the 12-month period ending on September 30 of the immediate previous calendar year. The average CPI is used for various maximum clauses.

For the purposes of several rules pertaining to pension plans, the Federal Consumer Price Index is the only acceptable CPI measure that can be used.

Cross references:

Maximum Lifetime Retirement Benefits – 8504(1)
Retirement Benefits Before Age 65 – 8504(5)
Pre-1990 Benefits – 8504(6)
Additional Lifetime Retirement Benefits – 8505(3)

1.6 Average Wage – 147.1(1)

(Salaire moyen)

The average wage for a calendar year is 1/12 of the total of the wage measures for 12 months ending on June 30 of the immediately previous year. For example, to determine the average wage for 2012, you would total the wage measures for July 2010 to June 2011 and then divide the total by 12.

Average wage is used to determine the MP limit for 1996 and next calendar years, to apply the maximum pension rule in section 8504 of the Regulations, and to determine, for certain situations, the amount that can be excluded from a member's PSPA resulting from a benefit upgrade or recognition of additional service.

Cross reference:

Maximum Benefits – 8504

1.7 Beneficiary – 8500(1)

(Bénéficiaire)

Beneficiary is defined as any person who has a right to receive benefits under the plan after the death of the member. Person is defined under subsection 248(1) of the Act and it is broad enough to include the estate of the member for death benefit purposes.

1.8 Benefit Provision – 8500(1)

(Disposition d’un régime)

A benefit provision means an MP or DB provision of the plan. Any benefit provision must meet the applicable requirements. A DB provision must meet the DB requirements and an MP provision (including an AVC provision) must meet the MP requirements.

1.9 Bridging Benefit – 8500(1)

(Prestation de raccordement)

Any benefit, which ends at a date determinable at the time the benefits start to be paid, is a bridging benefit. A plan that is directly integrated with CPP/QPP (that is the LRBs are reduced by CPP/QPP payments) is providing a bridging benefit from the time the LRBs start until the time they are reduced to take into account CPP/QPP. The bridging benefit is the amount, which ceases to be paid.

Plan text
All bridging benefits must meet the various bridging benefit restrictions. We must be able to identify bridging benefit clauses in a plan text even when the plan does not use the term “bridging benefits” to describe them.

Cross references:

Bridging Benefits – 8503(2)(b)
Additional Bridging benefits – 8503(2)(l)
Survivor Bridging benefits – 8503(2)(l.1)
Bridging Benefits – Cross-Plan Restriction – 8503(3)(k)
Retirement Benefits Before Age 65 – 8504(5)
Conditions Applicable After 1991 to Benefits Under Grandfathered Plan – 8509(2)(a)
Defined Benefits Under Grandfathered Plans Exempt from Conditions – 8509(4)(b)
Conditions Applicable to Amendments – 8511(1)(b)

1.10 Certifiable Past Service Event – 8300(1)

(Fait à attester)

For PSPA purposes, a certifiable past service event is any transaction, event or circumstance that causes a plan member’s LRBs for post 1989 years of service to be retroactively improved under a DB provision that is not exempt from certification due to subsection 8306(1) of the Regulations.

Cross references:

Past Service Benefits – 147.1(10)
Exemption from Certification – 8306(1)
Prescribed Condition – 8307(2)

1.11 Common-Law Partner – 248(1)

(Conjoint de fait)

A common-law partner is a person who is not the taxpayers’ spouse, with whom they live in a conjugal relationship, and to whom at least one of the following situations applies. He or she:

The term 12 continuous months in this definition includes any period where they were separated for less than 90 days because of a breakdown in the relationship.

1.12 Compensation – 147.1(1)

(Rétribution)

Compensation is defined as the total of the following:

Plan text

There should be an indication of the amounts that are included in earnings, such as salary or wages, etc. General wording such as "as determined by the employer" is not an acceptable definition for a DB provision.

The term remuneration is used in the definition of compensation and in many other provisions of the Act and Regulations. Remuneration is not defined in section 147.1 of the Act, or subsections 8300(1) or 8500(1) of the Regulations. The Registered Plans Directorate uses the common definition of remuneration in the context of RPPs. Remuneration is a taxpayer’s income for a taxation year for employment with an employer.

Cross references:

Pension Adjustment Limits – 147.1(8)
Pension Adjustment Limits – Multi-Employer Plans – 147.1(9)
Member Contributions – 8503(4)(a)
Lifetime Retirement Benefits – 8504(1)
Highest Average Compensation – 8504(2)
Alternate Compensation Rules – 8504(3)
Part-time Employees – 8504(4)
Additional Lifetime Retirement Benefits – 8505(3)(d)
Prescribed Compensation – 8507

1.13 Complete Period of Reduced Services – 8300(1)

(Période complète de services réduits)

A complete period of reduced services of a member is a period of reduced services that is not part of a longer period of reduced services.

Cross references:

Definition of Periods of Reduced Services – 8300(1)
Period of Reduced Services – Retroactive Benefits – 8308(4)
Period of Reduced Services – Retroactive Contributions – 8308(5)
Commitment to Make Retroactive Contributions – 8308(6)

1.14 Connected Person – 8500(3)

(Personne rattachée)

A person connected with an employer (connected person) is an individual who:

Also, an individual is deemed to own the shares if shares of the employer or of a related corporation are owned by:

Paragraph 8500(3)(g) of the Regulations also considers a person who, at any time, has a right to shares, or to acquire shares, of the capital stock of a corporation, to be deemed to own those shares (and therefore deemed to be a person connected with an employer) if it can reasonably be determined that one of the main reasons for the person having a right to the shares instead of owning them outright is to avoid being considered connected with the employer.

Connected person vs. significant or controlling shareholder

The description of a connected person is broader than that of a significant or a controlling shareholder in paragraph 8(d) of IC72-13R8. A significant shareholder is an individual who alone, or in combination with a parent, spouse or child owns 10% or more of the voting shares of a participating employer.

A controlling shareholder is an individual, or a person related to the individual, who directly or indirectly controls the corporation of which he or she is a significant shareholder.

This distinction is relevant for the purposes of the 50/50, reasonable remuneration, and prior DPSP or RPP coverage rules outlined below. It may also be relevant for limits on 1990 MP required contributions, also discussed below.

The following is an overview of the special legislative requirements that apply to connected persons and former connected persons. They replace, or are in addition to, those that apply to plans in which no connected persons participate.

Money purchase provision or plan

The prescribed compensation rules and the definitions of eligible period of temporary absence and eligible period of reduced pay combine to have the following effect from January 1, 1991:

Defined benefit provision or plan

Contributions

Often a plan in which connected persons participate is a designated plan. Under a designated plan, employer contributions for both current and past service, and member contributions for past service only, are subject to more restrictive rules. They are commonly referred to as the maximum funding rules.

Benefits – post-reform service

The following requirements apply to all plans, except MEPs:

Benefits – pre-reform service

Reference to pre-October 1968 and 1980 shareholder plans means plans established mainly for the benefit of significant shareholders and related persons before October 1968 or in 1980. For these plans:

50/50 rule

This rule applies for each employer participating in a plan for its employees whenever new or improved benefits are provided for pre-reform service. Generally, the total present value of benefits, including the new or improved benefits, for pre-reform service of active connected persons cannot be more than 50% of the total present value of benefits for pre-reform service of all active members, under all registered pension plans of the employer.

Usually, an active connected person does not include a member who has stopped accruing benefits under the plan. However, if additional pre-reform service of the connected person is being recognized or the connected person's accrued benefits for pre-reform service are being improved, then the connected person is considered active for purposes of the 50/50 rule.

Since the proportionality condition restricts the amount of pre-1990 service that can be recognized at a given time, a 50/50 demonstration is required each time additional pre-1990 service is acquired by a connected person connected with the employer who is subject to the proportionality condition.

Example

A company sponsors a plan in which connected persons participate. The plan is amended effective January 1, 1995 to include pre-reform service as pensionable service. If we accept the amendment, the value of benefits under the plan as at January 1, 1995 is $900,000, broken down as follows:

Service

Value of benefits

 

Persons connected

All active members

Total

Pre-reform

Post-reform

$300,000

$100,000

$250,000

$250,000

$550,000

$350,000

Total

$400,000

$500,000

$900,000

The present value of benefits for pre-reform service for connected persons is 54.55% of the present value of all benefits for pre-reform service ($300,000/$550,000). Therefore, even though the present value of connected persons' benefits for pre- and post-reform service is 44.44% of the present value of all benefits for pre- and post-reform service ($400,000/$900,000), the amendment is not acceptable.

If the employer participates in another plan increasing the present value of benefits for pre-reform service for active members from $250,000 to $300,000 or more, the amendment would be acceptable (subject to compliance with other applicable rules). Failing this, the employer may want to revise the amendment by reducing the number of years of pre-reform service being recognized if the reduction will result in satisfaction of the 50/50 rule.

Present value of defined benefits

Where earnings are a component of the formula for calculating benefits, the present value of benefits is based on earnings for pre-reform service.

In determining the present value, the actuary may choose any reasonable valuation basis (such as going-concern, solvency, or wind-up) as long as the same basis is used for valuing the defined benefits for both connected persons and non-connected persons. If the benefits for the non-connected persons are provided on an MP basis (and therefore not valued using actuarial methods) the actuary is free to choose any reasonable valuation basis for valuing the connected persons' benefits.

Where deferred annuities were purchased to provide benefits, the present value is the value of the promised benefits from the date the 50/50 rule is applied (that is, not the original purchase price).

For union-sponsored MEPs, it may be impractical to determine the present value of benefits on an actuarial basis. In these cases, the present value is considered to be the total pre-reform contributions for active members, plus associated earnings, at the date the 50/50 rule is applied. If it isn't possible to distinguish between contributions for active members and contributions for inactive members, the present value is considered to be total pre-reform contributions for all members excluding associated earnings.

Present value of MP benefits

The present value for each active member is the pre-reform contributions in the member's account, comprised of employer and member required contributions plus associated earnings on the pre-reform contributions earned up to the date of determination of the 50/50 rule. AVCs are excluded, except for past-service AVCs made before October 9, 1986. In the few cases where deferred annuities were purchased with MP funds, the present value is the value of the annuities at the date the 50/50 rule is applied.

The 50/50 rule does not apply to pre-October 1968 and 1980 shareholder plans. This is because any provision of new or improved benefits, or the addition of new employers or connected persons for a 1980 shareholder plan, breaks the rule disallowing increased benefits, or the cost of benefits, under such plans [see paragraph 8(d) of IC72-13R8].

Also, a waiver of the 50/50 rule is possible if:

Proportionality test

In addition to the 50/50 rule, when recognizing pre-1990 service for connected persons, the proportionality conditions outlined in Newsletter 99-1, Proportionality for pre-1990 Pension Benefits, must be considered. If none of the three exceptions apply, the present value of the LRBs being provided for pre-1990 service must not exceed the present value of LRBs provided to the individual on a current service basis, for post-1989 service.

Prior DPSP or RPP coverage

Service cannot be recognized if it was previously recognized under a DPSP or another RPP of the participating or related employer. Where the previous plan was an RPP, we will waive this requirement if the plan administrator of the existing RPP confirms in writing that:

Where the previous plan was a DPSP, there must have been simultaneous coverage under an RPP of the participating or related employer and the above conditions have to be satisfied for the previous RPP. If this is the case, the DPSP funds may be (but do not have to be) transferred to the existing RPP along with the funds under the previous RPP.

This rule does not apply to pre-October 1968 and 1980 shareholder plans for the same reason the 50/50 rule doesn’t apply [see paragraphs 8(d) and (e) of IC72-13R8].

It also doesn't apply if the connected person must be a member of the plan as a condition of union membership that is a prerequisite to employment and the connected person is subject to the same rights and conditions as all other members.

Transfers under another RPP and name changes

In cases where accrued benefits under another RPP are transferred to the plan, the 50/50 rule will only apply if the previously accrued benefits are upgraded.

Transfers in situations of name changes (where a connected person or IPP retain the existing plan documents and request a name change to effectively transfer the pension plan to a new employer) are acceptable and are not subject to the 50/50 rule. However, the 50/50 rule will apply in the event the benefits are upgraded.

Reasonable remuneration rule

Regardless of whether LRBs are based on remuneration, new or improved benefits for a pre-reform year of service can only be provided if the connected person's remuneration for the year is at least the lesser of:

It should be noted that the restriction on remuneration mentioned above only applies to the pre-reform years where the member was a connected person. For example, if a plan is recognizing past service from 1985 to 1990, and the member did not become a connected person until 1988, do not apply the above remuneration test to the years 1985, 1986 or 1987.

If requested to do so, consideration will be given to a waiver of the remuneration rule if the employer certifies that for the year(s) under consideration:

Financial statements have to accompany the certification

Plan text
The plan text must have the special restrictions on contributions and benefits that apply to connected persons, unless the plan is a MEP.

Cross references:

Definition of Compensation – 147.1(1)
Description of Arm's Length – 251
Definition of Specified Shareholder – 248(1)
Definition of Eligible Period of Temporary Absence – 8500(1)
Definition of Eligible Period of Reduced Pay – 8500(1)
Definition of Multi-Employer Plan – 147.1(1) & 8500(1)
Bridging Benefit – 8503(2)(b)
Pre-Retirement Survivor Benefits – 8503(2)(e)
Eligible Service – 8503(3)(a)
Early Retirement – 8503(3)(c)
Increased Benefits for Disabled Members – 8503(3)(d)
Pre-1991 Benefits – 8503(3)(e)
Artificially Reduced Pension Adjustments – 8503(14)
Maximum Lifetime Retirement Benefits – 8504(1)(a)
Employer Contributions Acceptable to the Minister – 8506(2)(a)
Prescribed Compensation – 8507
Conditions Applicable After 1991 to Benefits Under a Grandfathered Plan – 8509(2)(b)
Special Rules – MEP – 8510(5)
Designated Plans – 8515(1)
Designated Plans in Previous Year – 8515(2)
Maximum Funding Rules for Designated Plans – 8515
Newsletter No. 99-1, Proportionality Conditions for Pre-1990 Pension Benefits

1.15 Consumer Price Index – 8500(1)

(Indice des prix à la consommation)

The national consumer price index (CPI) for a month is published by Statistics Canada.

1.16 Deemed Contribution - 8500(7)

 (Cotisation réputée)

Certain amounts allocated to a member under an MP provision are deemed to be contributions made on behalf of the member for a number of provisions of the Regulations. These allocated amounts are:

These allocated amounts are deemed to be contributions made on behalf of the member for the following provisions of the Regulations:

1.17 Defined Benefit Limit – 8500(1)

(Plafond des prestations déterminées)

The DB limit for a calendar year is the greater of:

Cross references:

Lifetime Retirement Benefits – 8504
Money Purchase Limit – 147.1(1)

1.18 Defined Benefit Provision – 147.1(1)

(Disposition à prestations déterminées)

Whenever benefits under a provision are determined in any way other than solely based on contributions plus interest, the provision is a DB provision.

Plan text
Most plans have only one DB provision. However, some have two or more. For example, one class of employees might be entitled to a 1% benefit, while another could be entitled to a separate 2% benefit under the same plan. These would be two DB provisions. Another example is where the type of benefit between classes of employees differs under the same plan. For instance, the benefits of salaried employees may be earnings-based (as in the previous example) while the benefits of hourly employees are a flat benefit of a specified dollar amount per month per year of service.

Each DB provision has to meet the requirements of the Act and Regulations, as applicable. For example, if a member is entitled to benefits in two DB provisions, the maximum pension under section 8504 of the Regulations applies to each provision separately. Where a plan has more than one DB provision, the PA limits of subsections 147.1(8) and (9) of the Act restrict the combined benefits payable under the plan for any one employer or non-arm's length employers.

DB and MP combination plans are not acceptable if the total benefits, or the MP benefits, are capped by a DB limit. This is not acceptable because the cap makes the arrangement a DB provision for which there is no legislative method of calculating pension credits and, therefore, PAs are indeterminable. Examples of unacceptable arrangements are those where the member is promised:

A plan that promises the greater of DB and MP benefits is also not acceptable, even where only the DB is capped by a DB maximum. This is because the "greater of" benefits will only be known when they become payable. Pension credits, determined annually, are therefore indeterminable.

A combination arrangement that may be acceptable is one that provides DB and MP benefits, where the DB benefits are reduced by the MP benefits. This arrangement is acceptable only if:

Grandfathered plans

The combination and greater of plans, described above as "not acceptable", were permitted before pension reform. Therefore, pre-1992 benefits that accrued on a current service basis under these arrangements continue to be acceptable.

Cross reference:

Determination of Retirement Benefits – 8503(3)(f)

1.19 Dependant – 8500(1)

(Personne à charge)

A dependant of an individual is defined for the purposes of the survivor benefit provisions in paragraphs 8503(2)(d) and (e) of the Regulations. Those provisions permit an RPP containing a DB provision to provide a pension to a member's spouse or dependant after the member's death. A dependant of a member at the date of the member's death is a parent, grandparent, brother, sister, child or grandchild of the member who was dependent on the member for support at that date. (The listed relationships are given extended meanings by section 252 of the Act.) Furthermore, to qualify as a dependant the related individual must be:

A survivor pension can be provided to a dependant throughout his or her eligible survivor benefit period defined in 1.24 below.

Death benefits in the form of periodic payments may be paid to a spouse, common-law partner, former spouse or former common-law partner, or a dependant. Dependants are not entitled to the pre-retirement survivor benefit alternative under paragraph 8503(2)(f) of the Regulations or the additional post-retirement survivor benefits under paragraph 8503(2)(k).

IC72-13R8 provides for a reasonable pension to a spouse or to a parent, brother, sister or child, as long as such persons were dependent on the member at the time of the member's death.

Plan text:
Exemptions for pre-1992 death benefits may be granted where survivor retirement benefits are payable to beneficiaries other than the spouse, former spouse or dependant as defined for purposes of the Regulations.

Where a plan provides acceptable death benefits in the form of periodic payments to a beneficiary other than a spouse or former spouse, it must be clear that such beneficiaries meet the definition of dependant. It must be clear that they were, in all cases, dependent on the individual for support as well as meeting at least one of the other three criteria, for example under age 19, in school or infirm.

Cross references:

Post-Retirement Survivor Benefit - 8503(2)(d)
Pre-Retirement Survivor Benefit - 8503(2)(e)
Eligible Survivor Benefit Period – 8500(1)

1.20 Designated Plan – 8515

(Régime désigné)

An RPP that contains a DB provision is a designated plan if the DB pension credits of specified individuals (that is a person connected with an employer or a person who earns over 2½ times the YMPE), exceed 50% of all the DB pension credits calculated under the plan in a year. A plan remains a designated plan in subsequent years unless the Minister has waived the plan’s designated status.

Cross references:

Connected Person – 8500(3)
Special Rules for Designated Plans – 8515
YMPE – 8500(1)

1.21 Disabled – 8500(1)

(Invalide)

This is used in the definition of period of disability, for eligible service purposes only. It does not apply to retirement due to disability.

The definition refers to a physical or mental impairment that prevents the individual from performing the duties of the employment in which the individual was engaged before the beginning of the impairment. This definition also encompasses partial disability. An individual can be disabled if none of the former duties can be carried out or if the duties can only be carried out to a lesser degree.

Under subparagraph 8503(3)(a)(iv) of the Regulations, persons who are connected with the employer after 1990 may not accrue pensionable service during periods of disability, unless the period would otherwise qualify as service with the employer.

The only other restriction on accruals of eligible service during periods of disability is that the prescribed compensation on which it is based cannot exceed what it is reasonable to expect they would have earned had they been employed on their regular basis (that is full-time if usually full-time, part-time if usually part-time). Unlike eligible periods of reduced pay or temporary absence, there is no formula restricting the total amount of prescribed compensation for disability. Members may fund the entire benefit accruing during a period of disability.

For purposes of the alternative maximum rule for part-time employees under subsection 8504(4) of the Regulations, part time members are deemed by paragraph 8504(4)(d) to have rendered their regular rate of service for earnings commensurate with what they were previously earning during a period of disability of the member.

Plan text
We will accept a period during which an individual is receiving benefits from Workers' Compensation, a long-term disability plan and CPP disability benefits for this purpose. Otherwise, the plan must use wording which expresses the same or a more restrictive meaning. A medical certification is required, under paragraph 8503(4)(f) of the Regulations.

Cross references:

Eligible Service – 8503(3)(a)
Member Contributions – 8503(4)(a)(ii)
Evidence of Disability – 8503(4)(f)
Part-Time Employees – Eligible Periods – 8504(4)(d)
Prescribed Compensation – 8507

1.22 Eligible Period of Reduced Pay – 8500(1)

(Période admissible de salaire réduit)

This is a period of employment with the employer during which the remuneration received by the member is less than what the member could reasonably be expected to have received had the member worked on a regular basis at a rate of pay consistent with what the member was receiving before the period. The regular basis on which the member worked will usually be either full-time or part-time.

If the member is a person who is connected with the employer at any time during the period, that part of the period is not an eligible period of reduced pay.

Under the definition, the employer must have employed the member for at least 36 months before an eligible period of reduced pay can occur.

Special rules under subparagraph 8503(4)(a)(ii) of the Regulations allow members to contribute the amounts necessary to fund the benefit accrued during a period of reduced pay.

Section 8507 of the Regulations prescribes a notional amount to be included in compensation of the member for purposes of the PA limits and the maximum provisions under subsection 8504(1) so that members may accrue full benefits, as though they were working on a regular basis, during a qualifying period (up to certain limits). This amount is based on the difference between what the member would have earned had the member worked a regular year earning his or her regular rate of pay less what the member actually received. For example, if a member usually worked on a regular basis for a regular rate of pay of $50,000, but actually earned $30,000 in the year, $20,000 is prescribed to ensure the PA limits under subsections 147.1(8) and (9) of the Act are respected.

For purposes of the maximum pension rules for part time employees under subsection 8504(4) of the Regulations, part time employees who accrue benefits during eligible periods of reduced pay are deemed to have worked at their regular rate of pay and regular time (having regard to the service they rendered before the period of reduced pay), for the purpose of annualizing earnings and actualizing service in the maximum calculation.

Plan text
If connected persons participate in the plan, the terms of the plan must state that they are not eligible to accrue benefits during unpaid periods of temporary absence, unless the plan is a MEP or a SMEP. Connected persons may, however, accrue benefits relating to a period of pre-reform service, if it is in accordance with IC72-13R8 and the plan provides for it.

The plan must state that members must have worked for 36 months for the employer or predecessor employer in order for the period to qualify as an eligible period of reduced pay.

If the effect of the plan is to provide for deeming of earnings during periods when members are being paid less than they would usually receive for that amount of work, the restrictions must be met.

Also, the remuneration being attributed to periods of reduced pay (deemed remuneration) can’t exceed the rate of pay that the member would have received if the member worked on a regular basis.

Cross references:

Member Contributions – 8503(4)(a)
Part-Time Employees – Eligible Periods – 8504(4)(d)
Prescribed Compensation – 8507
Salary Deferral Leave Plan – 8508
IC98-2 – Prescribed Compensation for Registered Pension Plans

1.23 Eligible Period of Temporary Absence – 8500(1)

(Période admissible d’absence temporaire)

Eligible periods of temporary absence are periods where the individual does not provide services to the employer. Leaves of absence, layoffs, strikes, lock-outs or any other circumstance acceptable to the Minister can be included.

The types of leave stated in paragraph 8(e) of IC72-13R8 will continue to be allowed. These include the following:

Types of leave other than those listed above may also be considered for post-reform service on a case-by-case basis. The determining factor is that it must be an actual leave of absence, and not a severance of employment. The leave is only restricted to the extent that the PA limits are not exceeded.

Unpaid or partially paid leaves of absence taken after 1990 will be subject to the prescribed compensation provisions of section 8507 of the Regulations. The amount of leave taken before 1991 does not affect the prescribed compensation limit or the amount of post-1990 leave that may be recognized as eligible service.

Members may fund the entire benefit accruing during an eligible period of temporary absence in accordance with subparagraph 8503(4)(a)(ii) of the Regulations.

Section 8507 of the Regulations prescribes a notional amount to be included in compensation of the member for purposes of the PA limits so that members may accrue full benefits, as though they were working on a regular basis, during a qualifying period (up to certain limits). This amount is based on the difference between what the member would have earned had the member worked a regular year earning his or her regular rate of pay less what the member actually received. For example, if a member usually worked on a regular basis for a regular rate of pay of $50,000, but actually earned $0 in the year, a full year's compensation of $50,000 is prescribed to ensure the PA limits under subsections 147.1(8) and (9) of the Act are respected.

For purposes of the maximum pension rules for part time employees under subsection 8504(4) of the Regulations, part time employees who accrue benefits during eligible periods of temporary absence are deemed to have worked at their regular rate of pay and regular time (having regard to the service they rendered before the period of reduced pay), for the purpose of annualising earnings and actualising service in the maximum calculation.

Plan text
If connected persons participate in the plan, the terms of the plan must state that they are not eligible to accrue benefits during unpaid periods of temporary absence, unless the plan is a MEP or a SMEP. Reasonable sick leave, vacation, and jury duty for connected persons are considered acceptable, even though not specifically provided for in the Regulations.

Connected persons may accrue benefits relating to a period of pre-reform service, if it is according to IC72-13R8 and the plan provides for it.

The remuneration being attributed to periods of temporary absence cannot exceed the rate of pay that the member would have received if the member had worked.

It is not necessary for the plan to cap eligible periods of temporary absence similar to the cap imposed on qualifying periods by subsection 8507(2) of the Regulations. This is because, in some cases, the cap may not apply; for example if the periods of leave are picked up via a past service event.

MP provisions
MP provisions that provide for contributions to be made by connected persons during a paid leave of absence may be accepted. Finance has confirmed that the general underlying principle is that they have enough earnings to justify the benefit they get under the plan; as long as they have the income they should be able to get the benefit, since they could have sheltered the money in an RRSP in any case.

Pre-reform service
The terms of the plan must state what pre-reform service is being included as eligible service. If pre-reform service is being credited after 1988 for new plans (after 1991 for grandfathered plans), the service must comply with the eligible service requirements of 8(e) of IC72-13R8 or, if more restrictive, the terms of the plan. The amount of pre-reform service taken does not affect the prescribed compensation limit or the amount of post-reform leave that may be recognized as eligible service.

Cross references:

Connected Person – 8500(3)
Eligible Service – 8503(3)(a)
Member Contributions – 8503(4)(a)
Part-Time Employees – 8504(4)
Prescribed Compensation – 8507

1.24 Eligible Survivor Benefit Period – 8500(1)

(Période admissible de prestations au survivant)

An eligible survivor benefit period is the period during which death benefits payable under paragraphs 8503(2)(d) and (e) of the Regulations can be paid to a dependant. The period commences on the death of the member and ends at the end of the year the dependant turns 18, unless they are in full time attendance at school or are infirm.

Plan text
Where a plan provides death benefits in the form of periodic payments to dependants, the date such benefits will stop must be clear in the plan and must comply with the definition.

Cross references:

Dependant – 8500(1)
Post-Retirement Death Benefits – 8503(2)(d)
Pre-Retirement Death Benefits – 8503(2)(e)

1.25 Grandfathered Plan – 8500(1)

(Régime exclu)

A grandfathered plan is defined for the purposes of section 8509 Regulations, which contains special rules applicable to such plans, and paragraph 8511(1)(b), which restricts the amendments that may be made to bridging benefits under grandfathered plans. A pension plan is a grandfathered plan if it is an existing plan (as defined in subsection 8500(1)) that, on March 27, 1988 contained a DB provision.

Grandfathered plans also include plans that are established to provide benefits under a DB provision to one or more individuals in lieu of benefits to which the individuals were entitled under a DB provision of a plan text that existed on March 27, 1988, whether or not benefits are also provided to other individuals.

Successor DB plans will be considered as grandfathered, if:

Cross references:

Transition Rules – 8509

1.26 Individual Pension Plan – 8300(1)

(régime de retraite individuel)

For a calendar year, an individual pension plan (IPP) is an RPP that has a DB provision if, at any time in the year or a preceding year,

The Minister may waive the application of the definition of individual pension plan pursuant to subsection 8300(1.1) of the Regulations.

Cross references:

Related Persons – 251(2)
Provisional PSPA for IPPs – 8304(10)
IPP Minimum Amount – 8500(1)
IPP – Minimum Withdrawal – 8503(26)

1.27 IPP Minimum Amount – 8500(1)

(Minimum RRI)

The IPP minimum amount applies to a member of an IPP, or to an individual who was his or her spouse or common-law partner at the time of the member’s death. It is an amount that would be calculated as a minimum amount for a RRIF under subsection 146.3(1) of the Act, if the IPP was a RRIF and the individual was a RRIF annuitant.

Where more than one individual has direct rights to benefits under the IPP, the IPP minimum amount for each individual is calculated by prorating the property held under the plan by the ratio of the liabilities for each individual’s benefits to the total liabilities of all benefits under the plan.

As with a RRIF, the IPP minimum amount for the member (or spouse or common-law partner if applicable), is payable following the year in which the individual attains 71 years of age.

Cross reference:

IPP – Minimum Withdrawal – 8503(26)

1.28 Lifetime Retirement Benefits – 8500(1)

(Prestation viagère)

Lifetime retirement benefits are periodic payments which, once they commence to be paid to a member of a pension plan, will continue to be paid until death unless suspended or commuted before that time. In contrast, bridging benefits are payable for at most a fixed period of time (usually until a member reaches age 65). Lifetime retirement benefits include variable benefits made from an MP provision in accordance with paragraph 8506(1)(e.1) of the Regulations.

Whenever lifetime retirement benefits are referred to in the Regulations, it is important to keep in mind that bridge benefits are excluded.

1.29 Member – 147.1(1), 8300(1)

(Participant)

A member of a pension plan is an individual who has rights to receive benefits or is receiving benefits under the plan.

A member can be an individual who is currently participating under the plan or an inactive member whose rights remain under the plan.

The definition of member does not include an individual who has rights under the plan only because of the participation of a member. A surviving spouse or common-law partner would not be considered a member.

1.30 Money Purchase Limit – 147.1(1)

(Plafond des cotisations déterminées)

The MP limit is used for purposes of the PA limits of subsections 147.1(8) and 147.1(9) of the Act, and for purposes of the DB limit defined in subsection 8500(1) of the Regulations. The current and historic MP limits are available at the following link: canada.ca/registered-plans-limits.

1.31 Money Purchase Provision – 147.1(1)

(Disposition à cotisations déterminées)

An MP provision is a provision where the benefits are determined solely by contributions plus related interest. Members’ AVCs, under a DB or an MP plan, meet this definition. MP provisions are subject to the registration and pension credit rules applicable to an MP provision.

The Minister may exempt benefits under an MP provision of a grandfathered plan relating to pre-1992 contributions from the requirements of subsection 8506(1) of the Regulations (see subsection 8509(10)). This is done on a case-by-case basis.

1.32 Multi-Employer Plan – 147.1(1), 8500(1)

(Régime interentreprises)

A MEP is a registered pension plan sponsored by a group of employers. However, not every plan in which more than one employer participates is considered a MEP.

A pension plan is a MEP if, at the beginning of the year, it is reasonable to expect that at no time in the year will more than 95% of the active plan members be employed by a single participating employer, or by a group of related participating employers. The terms related persons and related group are defined in subsections 251(2) and 251(4) of the Act, respectively. More information can also be found in Income Tax Folio S1-F5-C1, Related persons and dealing at arm’s length.

A pension plan is also a MEP if it is a SMEP as defined under subsection 8510(2) of the Regulations.

A MEP is subject to the PA limits under subsection 147.1(9) of the Act and certain provisions of the Regulations are relaxed for MEPs under the special rules described under subsection 8510(5) of the Regulations.

Cross references:

Pension Adjustment Limit Multi-Employer Plans – 147.1(9)
Definition of related persons – 251(2)
Definition of related group – 251(4)
Definition of Multi-Employer Plan – 8510(1)
Special Rules Multi-Employer Plan – 8510(5)
Income Tax Folio S1-F5-C1, Related persons and dealing at arm’s length

1.33 Participating Employer – 147.1(1)

(Employeur participant)

A participating employer is an employer who has made or is required to make contributions to the plan for his employees or former employees.

A participating employer can also include an employer prescribed under subsection 8308(7) of the Regulations.

A former employer is not considered to participate under a provision solely because funds have been transferred from that employer’s plan to the provision. For example, if Employer A makes contributions to plan A to fund an employee’s benefits and that employee then commutes those benefits and transfers them to Plan B, that transfer does not make Employer A a participating employer under Plan B.

Cross references:

Loaned Employees – 8308(7)
Re-Employed Member – 8503(9)
Re-Employed Member – Special Rules not Applicable – 8503(10)
Maximum for Connected Persons – 8504(1)(a)(i)
Highest Average Compensation – 8504(2)
Qualification as a SMEP – 8510(3)
Minister's Notice – 8510(4)
Purchase of Additional Benefits – 8510(8)
Maximum Funding Valuation – 8515(7)(e)

1.34 Past Service Event – 147.1(1), 8300(1), 8300(2)

(Fait lié aux services passés)

A past service event is any transaction, event, or circumstance that causes a plan member’s lifetime retirement benefits for post 1989 years of service to be retroactively improved under a DB provision.

1.35 Pensionable Service – 8500(1)

(Services validables)

The pensionable service of a member of a pension plan under a DB provision of the plan consists of the periods in respect of which lifetime retirement benefits are provided to the member under the provision. For this purpose, benefits are considered to be provided in respect of a particular period if the benefits are connected in some way with that period. The most common connection would be the performance of services or the receipt of remuneration in the period. Additional retirement benefits provided solely as a result of an upgrade or indexation of accrued benefits or an increase in remuneration would be considered to be provided in respect of the period in respect of which the accrued benefits are provided. Restrictions on the periods in respect of which lifetime retirement benefits may be provided are set out in paragraph 8503(3)(a) of the Regulations.

Often, pensionable service will correspond to the credited service that is used in a benefit formula. However, this will not always be so, since pensionable service consists of periods of elapsed time. Thus, for example, if a plan member works on a half‑time basis throughout a year, the full year will be considered to be pensionable service for the purpose of the registration conditions, whereas the benefit formula will generally count only one‑half of the year as credited service, due to the application of paragraph 8503(3)(i) of the Regulations.

Pensionable service is relevant mainly for the purposes of several rules that limit benefits payable under a DB provision: the maximum pension rule in subsection 8504(1) of the Regulations, the limit in subsection 8504(5) on total retirement benefits payable before age 65, the early retirement rules in paragraph 8503(3)(c), and the bridging benefit rules in paragraphs 8503(2)(b) and 8509(2)(a).

Plan text
The plan provisions should not permit the accrual of more than one year of service in a calendar year. Although this requirement is not explicitly stated in the Act, the following Regulations support the RPD’s position:

Whenever the Regulations refer to pensionable service, they mean elapsed time. Therefore, a year of part-time service counts for a full year of pensionable service.

The bridge benefit restrictions of paragraph 8503(2)(b) and subsection 8504(5) of the Regulations are based on pensionable service as defined in subsection 8500(1), as is the definition of early retirement eligibility service for purposes of the early retirement reduction in paragraph 8503(3)(c).

The maximum pension formulas are based on pensionable service as well, but require that the service be actualized and the earnings annualized in accordance with subsection 8504(4) of the Regulations.

Cross references:

Bridging Benefits – 8503(2)(a)
Lifetime Retirement Benefits – 8504(1)
Part-Time Employees – 8504(4)
Retirement Benefits Before Age 65 – 8504(5)
Pre-1990 Benefits – 8504(6)

1.36 Period of Disability – 8500(1)

(Période d’invalidité)

See definition of disabled under subsection 8500(1) of the Regulations.

Periods of disability qualify as eligible service as long as the member was not connected during the period. A connected person may, however, include a period of pre-reform disability as eligible service. Members may fund the entire cost of the benefit accruing during the period of disability. Evidence of disability is required before the benefits for that period may be paid to the member.

For purposes of the maximum pension, the member is deemed to have performed regular service for commensurate pay. The prescribed compensation rules allow prescribing of compensation for periods of disability with no cap on the number of years.

Since a period of disability can be considered as eligible service under the plan terms, a benefit can accrue for the period, even if the employee has terminated employment due to the disability.

Cross references:

Eligible Service – 8503(3)(a)(iv)
Member Contributions – 8503(4)(a)(ii)
Evidence of Disability – 8503(4)(f)
Part-Time Employees – Eligible Periods – 8504(4)(d)
Prescribed Compensation – 8507

1.37 Predecessor Employer – 8500(1)

(Employeur remplacé)

In relation to a particular employer, a predecessor employer is an employer (in this definition referred to as the vendor) who has sold, assigned or otherwise disposed of all or part of the vendor’s business or undertaking or all or part of the assets of the vendor’s business or undertaking to the particular employer or to another employer who, at any time after the disposition, becomes a predecessor employer in relation to the particular employer, where all or a significant number of employees of the vendor have, in conjunction with the disposition, become employees of the employer acquiring the business, undertaking or assets.

1.38 Pre-Reform Service & Post-Reform Service

(Services avant et après la réforme)

Pre-reform service means pre-1991 service for all plans except grandfathered plans. Pre-reform service for grandfathered plans means all service before the earlier of January 1, 1992 and the effective date of the amendment made to the plan to comply with the Regulations, but in no event earlier than January 1, 1991. All service after those dates is post-reform service. Pre-reform benefits are benefits that accrue for a period of pre-reform service. All other benefits are post-reform benefits.

1.39 Public Safety Occupation – 8500(1)

(Profession liée à la sécurité publique)

A public safety occupation is defined as the occupation of a firefighter, police officer, corrections officer, air traffic controller, commercial airline pilot, or paramedic. The definition is used for the purpose of the early retirement reduction rules under paragraph 8503(3)(c) of the Regulations.

Plan text:
The list of qualifying jobs is to be strictly adhered to.

Cross reference:

Early Retirement – 8503(3)(c)

1.40 Retirement Benefits – 8500(1)

(Prestation de retraite)

The expression "retirement benefits" is defined as benefits provided to an individual under the terms of a provision of a pension plan that are payable on a periodic basis. For example, the pension (including bridging benefits) payable to a member and the pension payable on death to the member's spouse are considered to be retirement benefits, while lump sum benefits payable after the death of a member are not considered to be retirement benefits.

This is a more general term than the term lifetime retirement benefits. It includes lifetime retirement benefits, bridging benefits and death benefits paid on a periodic basis.

1.41 Single Amount – 147.1(1)

(Montant unique)

A single amount is not part of a series of periodic payments. If an individual should have been receiving a series of periodic payments but missed receiving some of them, the lump sum which might be paid in lieu of the missed payments, is not a single amount. However, it is quite possible to receive two or more single amount payments over a stretch of time.

Cross references:

Transfers – 147.3
Lifetime Retirement Benefits – 8503(2)(a)
Lump Sum Payments on Termination – 8503(2)(h)
Commuted Value – Pre-Retirement Death – 8503(2)(i)
Lump Sum Payments on Death – 8503(2)(j)
Commutation of Benefits – 8503(2)(m)
Commutations – Beneficiary’s Benefits – 8503(2)(n)
Offset Benefits – 8503(3)(j)
Undue Deferral of Payment – 8503(4)(d)
Commutation of Lifetime Retirement Benefits – 8503(7)

1.42 Specified Multi-Employer Plan – 147.1(1)

(Régime interentreprises déterminé)

A specified multi-employer plan (SMEP) has the meaning assigned by regulation. See chapter 17 for the full definition of a SMEP.

Cross references:

Definition of Specified Multi-Employer Plan – 8510(2)
Qualifications as a Specified Multi-Employer Plan – 8510(3)
Minister’s Notice – 8510(4)
Special Rules – Specified Multi-Employer Plan – 8510(6)
Additional Prescribed Conditions – 8510(7)
Purchase of Additional Benefits – 8510(8)

1.43 Spouse – 8500(5), 252(3)

(Époux)

With effect after 1992 and before 2001, subsection 252(4) of the Act extended the meaning of spouse to include a person of the opposite-sex with whom the individual cohabited in a conjugal relationship for at least one year or, if they had not cohabited for a full year, were natural or adoptive parents of the same child. Subsection 8500(5) of the Regulations applies subsection 252(3) of the Act to extend the meaning of spouse and former spouse to include parties to a voidable or void marriage.

Two events have had an impact on the legal meaning of spouse. First, as a result of the Federal Government’s refusal to appeal the decision rendered in the matter of Rosenberg and Canadian Union of Public Employees v. Canada, RPP’s may provide survivor benefits to same-sex partners.

As a result, we accept new plans, or amendments to existing pension plans, providing survivor benefits no earlier than the date the Rosenberg decision was rendered, that is April 23, 1998. The decision itself specified that it applied only to RPP survivor benefits. Therefore, it did not apply to any other RPP advantage such as a transfer. Neither did it apply to other registered vehicles, such as RRSPs and RESPs.

Second, on February 11, 2000, the government tabled Bill C-23 to give effect to the Rosenberg decision across a wide spectrum of federal laws. This bill received Royal Assent on June 29, 2000, becoming the Modernization of Benefits and Obligations Act (MBOA) and amended the Act for all deferred income plans to offer same-sex couples the same tax treatment as opposite-sex common-law spouses.

More specifically, as of January 1, 2001 subsection 252(4) of the Act was repealed and the term common-law partner, which makes no reference to persons of the opposite sex, was added to subsection 248(1). Subsection 252(3), which defines married or formerly married couples, remains in effect.

As a result, the Act now recognizes two categories of relationship equal in all respects under the Act; spouse and common-law partner. The first includes only legally married individuals and the second, opposite-sex and same-sex individuals who establish their relationship by meeting subsection 248(1) of the Act.

Section 144 of the MBOA (Bill C-23) allowed taxpayers who made a joint election to be treated as common-law partners under subsection 248(1) of the Act in the 1998, 1999 and 2000 taxation years. If taxpayers choose to be treated as common-law partners, the choice applied to all purposes of the Act. That is, they could not choose to be treated as common-law partners for some purposes and not for others.

Since the joint election was a condition that applied to all individuals as taxpayers, we did not require the plan text to make specific mention of it. The election must have been made before April 30, 2001 (or June 15, 2001, if the taxpayer was self-employed). Taxpayers could make the election by ticking a box on the T1, Income Tax and Benefit Return or by writing a letter to the CRA.

Because subsection 252(4) of the Act was not repealed until 2001, opposite-sex common-law partners continued to be treated as spouses and were not subject to the joint election requirement. The joint election requirement only affected same-sex common-law partners in 1998, 1999 and 2000.

Until Bill C-23 was tabled, the Rosenberg decision allowed plans to provide survivor benefits to same-sex partners and no joint election was possible. Survivor benefits or annuities that started to be paid after April 22, 1998 (Rosenberg) and before February 11, 2000 (Bill C-23) did not require a joint election in order to continue the payments. Otherwise, the joint election requirement applied to all RPP benefit payments and transfers made in 1998, 1999 and 2000.

After 2000, joint elections are not required; the nature of the relationship itself determines the tax treatment. This means, when taxpayers self-identity as meeting the Act’s definition of spouse, or common-law partner, the actual relationship at the time dictates the tax treatment.

Plan text
Many plans now use an expanded definition of spouse. Such definitions include: legally married individuals, opposite-sex common-law couples or, more recently, the equivalent of same-sex partners. Plans are not required to use the term common-law partner.

Effective January 1, 1998, whatever definition the plan uses, the only individuals who could be included as the beneficiaries of survivor benefits or transfers under the plan were the ones who:

Effective January 1, 2001, plan definition(s) can only include individuals who:

With effect no earlier than January 1, 1998, the definition of spouse no longer needs to mention “opposite sex” or “same-sex.” The term that a plan uses to define the equivalent of common-law partners must now ensure that individuals involved cohabit in a conjugal relationship for at least one year and otherwise meet the requirements of subsection 248(1) of the Act. For opposite-sex couples, terms like “living together as husband and wife” or “consort” are equivalent to “conjugal relationship.”

Where a plan provided for survivor benefits, payments on partnership breakdown or transfers for same-sex partners, payments or transfers made in 1998, 1999 or 2000 required a joint election subject to one exception. The exception was that joint elections were not required where the plan had paid survivor benefits after April 22, 1998 and before February 11, 2000.

A legal representative of a deceased plan member and the surviving common-law partner of that member may now jointly elect to allow payment of survivor benefits or transfers as stated above.

In June 2002, the Quebec National Assembly passed Bill 84 that amended the Supplemental Pension Plan Act to recognize civil unions. A civil union is similar to a marriage, with the exception that it is recognized for couples of the opposite or same sex. Under Quebec law, civil unions have the same rights and obligations as married couples, which may result in benefits being provided to individuals who are not entitled to such benefits under the Act. The definition of common-law partner under the Act only recognizes same-sex spouses who have cohabited for at least one year.

It is our current understanding that the Department of Finance has no immediate plans to amend any laws to recognize civil unions. Since this is the case, plan terms that recognize civil unions must include an overriding clause specifying that only individuals meeting the definition of common-law partner under subsection 248(1) of the Act will be entitled to receive survivor benefits or benefits for a division of property due to a breakdown in partnership.

1.44 Surplus – 8500(1) & (1.1)

(Surplus)

Surplus under an MP provision means such part of unallocated amounts that are not reasonably attributable to forfeited amounts and related earnings, employer contributions under the provision that will be allocated to members, and plan earnings that will be allocated to members, other than earnings reasonably attributable to surplus.

The definition of surplus under subsection 8500(1) of the Regulations applies for subsection 147.3(7.1) of the Act and paragraph 8506(2)(c) of the Regulations.

1.45 Totally and Permanently Disabled – 8500(1)

(Invalidité totale et permanente)

An individual is totally and permanently disabled if the individual suffers from a physical or mental impairment that prevents the individual from engaging in employment for which the individual is reasonably suited because of the individual's education, training or experience and if there is no reasonable expectation that the individual will recover from the disability.

This differs from the definition of disabled in that the individual is not expected to recover from the impairment and the impairment prevents the individual from performing the duties of any employment for which the individual is reasonably suited.

Plan text:
A plan may provide unreduced early retirement under paragraph 8503(3)(c) of the Regulations or an additional benefit under paragraph 8503(3)(d) for a member who retires on account of total and permanent disability. In order to qualify for these benefits, it has to be evident from the plan that the individual meets the definition of totally and permanently disabled or that the individual is eligible for a disability pension under the CPP or the QPP.

A member who retires on account of disability can receive an unreduced pension without meeting the definition of totally and permanently disabled if the member would otherwise qualify for an unreduced pension under paragraph 8503(3)(c) of the Regulations by meeting the age and service criteria.

Cross references:

Early Retirement – 8503(3)(c)(ii)(D)
Increased Benefits for Disabled Member – 8503(3)(d)
Evidence of Disability – 8503(4)(e)
Suspension or Cessation of Pension – 8503(8)
Re-Employed Member – 8503(9)

1.46 Wage Measure – 147.1(1)

(Mesure des gains)

Wage measure is the monthly industrial total in Canada representing average weekly earnings for all employees, including overtime. The term is used for the definition of average wage and to determine the amount that can be excluded from the PSPA of a member who has stopped accruing benefits and whose deferred benefits are increased.

The Employment and Earnings Statistics Division of Statistics Canada can provide you with the current figures.

1.47 Year's Maximum Pensionable Earnings – 8500(1)

(Maximum des gains annuels ouvrant droit à pension)

The year’s maximum pensionable earnings (YMPE) has the meaning assigned by section 18 of the CPP. We will also accept a definition of the YMPE referencing the QPP.

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